Trends in the UK’s sustainable and conventional fund market through the lens of Lipper data. How is sustainable investment responding to the birth of the UK’s SDR? Dewi John, LSEG Lipper’s Head of Research for UK and Ireland, and Leevania Naicker, Senior Customer Learning Manager at LSEG, look at the UK’s responsible investment fund flow data, alongside the general state of the UK fund market for Q3 2024, in the context of broader economic trends.

Lipper’s head of UK research, Dewi John, reviews the main trends in conventional and sustainable funds, in the context of the economic backdrop. Source for FTSE Russell data: FTSE Russell Global Investment Research, Performance Insights, August 2024

Passive bond flows remain strong, despite poor macro environment Asset class view Bond funds have enjoyed the largest year-to-date inflows, at £11.59bn. Equities saw the heaviest redemptions, at £1.62bn. Active v passive Passive funds in total saw inflows of £2.06bn, while active funds suffered outflows of £5.36bn. Passive bonds (£1.58bn) and equities (£516m) enjoyed significant inflows over the month. Classifications Mixed Asset GBP Aggressive retains its number-one slot for the second consecutive month, netting £1.13bn. Sterling bond strategies were popular, as Corporates, Government, and Inflation Linked took £1.53bn between them. Sustainable fund flows Total sustainable flows were £1.61bn, as conventional

Following October’s dash for cash, November rebounds hard as investors put their cash to work in more than £12bn of long-term assets.   Asset Class View Equity funds netted £5.5bn, the largest inflow for the asset class since October 2020. Mixed-assets funds saw the next largest influx, taking £4.1bn. Active v Passive Bond passive inflows were split almost exactly 50/50 between ETFs and mutual funds. Equity ETFs attracted £501m, with their mutual fund passive equivalents netting £1.9bn. Classifications Equity Global saw the largest inflows (£3.3bn), followed by Equity US (£2.7bn), both with a growth bias. All in all, November looked

  Asset Class View October saw the largest UK fund inflows on record of £41.1bn. However, this was due to £66.6bn inflows to money market funds, with all other asset classes in redemption mode. Alternative, bond, equity and mixed asset funds all suffered redemptions in excess of £5bn, with bonds seeing the largest outflows of £7.9bn. Active v Passive Excluding money market funds, active funds saw total outflows of £19.5bn, while passives lost £6bn. Despite huge redemptions for the asset class overall, bond ETFs attracted more than £1bn for the month. Classifications Unsurprisingly, Money Market GBP was the classification with

Most cash goes to mutual funds, as ETFs see their share squeezed to a sliver for September   Asset Class View Money market and equity funds saw outflows (-£6.04bn and -£1.51bn, respectively), while alternatives and bonds attracted money. Active v Passive Bond funds’ flows of £732m were split between £278m active and £454m passive, while active equity funds lost £2.38bn as their passive peers took in £869m. A muted month for ETFs, as bond and equity flows were just 11% and 4%, respectively, of their passive mutual fund equivalents. Classifications The most popular classification was Equity Global (£1.37bn), followed by

Emerging markets were the only equity group to appear in the top 10 classifications.   Asset Class View Money market and equity funds shed £2.2bn and £528m, respectively, with mixed assets (£1.5bn), bond (£1.5bn), and alternatives (£665m) gaining. Active v Passive Almost all equity net outflows were on the active side, with little overall movement on passive, while bond inflows were split fairly evenly between the two strategies. Equity passive mutual funds took in £327m, while their ETF counterparts shed £297m. Bond ETFs attracted £425m of the passive bond total of £517m. Classifications Equity Emerging Markets Global was the top

Passive equity and bond funds took money, while their active equivalents saw outflows.   Asset Class View All asset classes except Real Estate were in positive territory this month, with Mixed Assets leading with gains of £1.83bn. Active v Passive Passive bonds netted £1.35bn, with their active peers shedding £678m, while equity trackers took and £364m and active strategies saw £79m outflows. ETFs and passive mutual funds took £591m and £754m, respectively. However, equity ETF experienced negative flows (-£684m) while their passive mutual fund peers attracted £1.05bn. Classifications Mixed Asset GBP Aggressive attracted most cash, up from second place in

The previous month’s on-risk sentiment reverses, with eight out of 10 largest outflows coming from equity classifications.   Asset Class View Money market and bond funds took the most money in May (£2.7bn and £2.68bn, respectively), with equities shedding £1.29bn. Active v Passive Passive bond funds attracted most of the cash going into the asset class—£1.67bn out of the total—while passive equities lost £323m compared to a £964m loss for active strategies. ETFs netted £716m of the £1.67bn of passive bond flows, and £21m of positive equity flows, compared to outflows of £344m for equity passives overall. Classifications Bond GBP

Equity, bond, and mixed-assets fund flows are all positive, with the biggest losses coming from money market vehicles.   Asset Class View Investors funded allocations to equities (£4.34bn), mixed-assets (£2.3bn), and bond funds (£1.75bn), with net outflows from money market funds (-£7.21bn), Active v Passive Passive funds took the most bond cash, and more than half of equity flows (£2.55bn). Nevertheless, April was a better month for active managers, moving into positive territory from March’s negative flows. Equity ETFs netted just £137m out of a total of £4.26bn for passive equity. Bond ETFs did rather better, with £452m of the

Muted flows conceal large reallocations from active to passive in equity and bond funds Asset Class View Money Market funds took November’s largest share of flows (£4.9bn) in a partial reversal of October’s ‘risk on’ environment. This was followed by Mixed Assets, with £3.7bn. Both equities and bonds were in positive territory, netting £1.5bn and £1.3bn, respectively. Active v Passive Looking beyond the headline figures, passive equity funds took in £31.5bn, and bonds £10.5bn, leaving their active peers deep in negative territory. While mutual funds dominate passive flows, ETFs continue to edge into the space, with equity ETFs claiming 7%

Refinitiv Lipper’s new review of UK monthly fund flows coincides with a strong risk-on October, as equities dominate.The bulk of this has been invested in developed markets—largely the UK and US—in line with market recovery trends from April. Most of this has been deployed using passive vehicles. While risk assets wobbled in June—with equities seeing more outflows than they did in March—it looks like investors are currently confident that the market has further to run. Asset Class View UK investors’ risk appetite increased in October, with net inflows into equities (£16bn) and out of bonds and money market funds (-£4.43bn